Enforcement Zeroing In On Itc Bhadrachalam

This has pushed the the tobacco giants wholly-owned subsidiary further into the Foreign Exchange Regulation Act (Fera) dragnet.

The company already faces charges of over-invoicing of machinery imported from Italy and illegal remittance of funds parked abroad to India through the Chitalias.

In the next phase of its investigations, the directorate is expected to zero in on the overseas deals of two other ITC subsidiaries, Triveni Tissues and Indian Leaf Tobacco Division.

In the ITC Bhadrachalam deal, the sums accruing from under-invoicing were reportedly received by at least two former top ITC officials.

According to unconfirmed reports, the Bhadrachalam affair may also figure in the EDs charges against former ITC chairman K L Chugh.

 

This would damage the prospects of the conglomerates entire paper division, as it is believed to be one of the most successful diversifications carried out by the tobacco company - and that too under Chughs personal inititative.

The paper division has been going through a bad year due to the sharp rise in prices of pulp, one of its major raw materials.

Its results for 1995-96 took a beating even as ITCs flagship tobacco division showed good results.

ITC Bhadrachalam is currently undergoing an expansion for an additional annual capacity of 1,20,000 tonnes of coated packaging boards.

A captive energy project, expected to start production in 1997, is simultanoeusly on the cards.

Meanwhile, a team of officers from Hyderabad was expected to arrive in Calcutta with ITCs general manager (finance) Lakshminarayan late last night.

Lakshminarayan is expected to be summoned some time next week.

He is one of the prime suspects in ITCs deals with the Chitalias and was a privy to most fund transfers carried out by the cigarette giant.